A Reversal Of Fortunes

Income Gaps Slow Growth, But Not In Chicago Area

That`s the thrust of a new study on the economic fortunes of America`s major metropolitan areas by the National League of Cities.

The study finds that metro areas with the smallest differences in economic well-being between city and suburbs tend to have the most bullish regional economies.

However the Chicago area, which has extreme city-suburban differences but a relatively strong regional economy, is an exception to the trend.

That trend, according to league researchers, holds that a large income disparity between a core city and its suburbs often causes a slowdown in economic growth or even a drop in employment throughout the entire

metropolitan area.

This may happen because a deteriorating central city makes the region less attractive to potential investors or because it requires a

disproportionate amount of government money for social services, said Larry C. Ledebur, an economist at Wayne State University in Detroit and one of the study`s authors.

``If you have a healthy city, that spurs growth in the region as a whole. If you have an economically depressed city, you don`t have that economic stimulus,`` he said.

Nationally, the 1987 per-capita income for 57 large cities was $10,796, or just 58 percent of the per-capita income for the suburbs of those metropolitan regions, $18,469.

That represented a sharp drop from 1980, when the city income level was 89 percent of the suburban level, according to the study, co-authored by William R. Barnes, the league`s research director.

In the Chicago metropolitan area, the chasm between city and suburbs in 1987 was much greater than the national disparity. The per-capita income in Chicago was $10,806. In the suburbs, it was 122 percent higher at $24,005.

The study found that, on average, a metropolitan region with large income differences between the central city and its suburbs in 1987 was likely to suffer a net loss in jobs between 1988 and 1991. In that same period, a region where the city and suburbs were on a more equal footing was likely to experience strong employment gains.

``Metropolitan areas with smaller per-capita income disparities tend to be more prosperous,`` the authors wrote.

The Chicago metropolitan region, however, ran counter to the national trend, notching a 3.2 percent increase in jobs, despite having one of the largest urban-suburban income disparities, according to the study.

(69.8 percent), Los Angeles (67.7 percent) and Phoenix (67.4 percent). Because of problems with the availability of data, New York City was not included in the study.

Ledebur said in an interview that it`s possible that the Chicago area did better than expected because it is an economic center for the upper Midwest and, as such, less subject to local trends.

Also, he said, ``Chicago`s per-capita income is not all that devastatingly low. The disparity is high because you have a lot of wealthy suburbs.``

In contrast to the Chicago experience, the study found that metropolitan regions, on average, suffered a net loss in jobs if the per-capita incomes of their central cities were less than 55 percent of the suburban average.

On the other hand, some metropolitan areas were big winners, with an average increase in jobs of nearly 6 percent between 1988 and 1991. They were the areas where the central city`s income was at least 78 percent of the suburban average.

Suburbs, Ledebur said, often feel that they can go it alone, and

``cities, even in the midst of their plight, tend to thumb their noses at their suburbs.``

But the correlation between income disparities and job growth proves a strong interconnection in the economic fates of urban and suburban areas, he said.

``Too often, we get hooked into the idea that cities and the suburbs (as a group) and individual suburbs are separate economies. They are not. They`re one regional economy. We need to recognize that and treat it as a whole,``

Ledebur said.

The league study will provide fuel for regional planners in their efforts to promote urban and suburban cooperation, and for social activists who have long argued that affluent suburbanites need to pay more attention to the poverty and other social ills concentrated in cities.

Suburban politicians, however, are likely to be less receptive to calls for cooperation. Once ignored in Springfield and other state capitals, they are important power-brokers today with hopes of even greater clout in the future. Such clout is easier to consolidate when the central cities are characterized as the enemy of the suburbs.